big bruv asks: “Why should landlords pay rates for services on a property that he does not use?”

The answer is that the title is in his/her name, as is the obligation.

But you know that, don’t you, big bruv?

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Jing

Why should landlords pay rates for services on a property that he does not use? why should I subsidise state house tenants anymore than I already do?

I will always maintain that a poll tax is the fairest way.

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Dear Big Bruv, you say :BJ

“Terence is right, I do believe in a poll tax as apposed to rates, quite why those who own property have to subsidise those who do not is confusing.
We all use the services therefore we should ALL pay. ”

Umm, so tell me again why tenants pay rent?
Do you mean to say that rent isn’t used to pay rates? It would be a rather silly landlord who paid the rates out of their own pocket now wouldn’t it?

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Toad – Thanks for pointing out the problem at the bottom of the scale as well…. I am not familiar with that end of things, but there’s no doubt at all that the way taxes and benefits are organized here needs way more change than the Minister’s office is willing to undertake…

Lower the top rate? Nope… but smoothing out the progression and the benefit structure is necessary. The top effective marginal rate of someone who is trying to claw his/her way out of poverty, or someone who is finally making enough to qualify for a mortgage should not be higher than the rate on the guy who is trying to claw his way to the top of the “rich list”. It should sure as hell not be twice as high…. and that is what we see here in NZ.

It’s a simple iterative adjustment analysis. After 100K of income a rate of 50% and after 400K make it 60% and then go back to the benefits and business taxes and work out how to balance things. Then adjust and repeat until the system yields a monotonically increasing effective marginal rate but doesn’t collect any more in tax. The economic and mal-investment problems in NZ are sourced in our tax and benefits structure and the intransigence of the ministers in charge of money has a lot more to do with the money of their mates than with the health of the national economy.

respectfully
BJ

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Hey BJ,
yep, do love the oneliners (back-tracking up the blog comments a bit)

So, Stuey, can u fix it so that we can search the blog by commenters’ handles?

So much easier to find BJ’s bon-mots thusly. And think of the fun we could have correlating what David Farrar said on any given adjacent days… or Craig Ranapia, for that matter.

Who needs conspiracy theorists when you’ve got a good search engine, and unix-geeks to run it

And for the mysogynist deluded out there: I’m not misandrist, there ARE men I like (intellectually and otherwise), I just don’t appreciate abuse and ignorance dressed up as opinion or political comment.

Women who have stood in your shadows all their lives will rejoice to come out into the sunshine, and I will joy in their awakening whever I meet such women. I work for the day when I can truthfully say that half the world are effectively represented in the policies of the whole world; that is womenkind, who are silenced in so many countries, and would be silenced here if there hadn’t been strong women to stand up for the rights of all women.

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bjchip said:
it is the benefit reduction on top of the tax that yields the effective 90% marginal rate

Actually, it is an effective marginal tax rate of more than 90%. Here’s how it works. Let’s assume I’m on an unemployment benefit, with a partner, but (just to keep the calculations simple) no kids.

Net unemployment benefit abates at a rate of $0.70 for every $1.00 of gross earnings above $80.00. But the unemployment benefit is considered the primary income, so earnings from employment have tax deducted not at the lowest rate of 19.5%, but at the secondary tax rate of 21.0%. Add to this the ACC earner levy of 1.3%.

So that’s an effective marginal tax rate of 70.0+21.0+1.3 = 92.3%.

Given that the net rate of unemployment benefit before abatement for a couple is $289.84 per week, the 92.3% effective marginal tax rate operates from $80.00 per week gross earnings to $494.06 per week gross earnings, which is the level of income at which the unemployment benefit is fully abated.

So, if my partner and I between us earn $80.00 per week gross per week, we’ll have $369.84 in the hand each week. But if we get some extra work and earn $494.06 gross per week, we’ll have $383.88 in the hand per week. The additional $14.84 probably won’t even pay for the cost of getting to the extra work.

So next time you hear of a beneficiary avoiding work, or working “under the table�, this might give some idea why. If the system is unfair, and is perceived as unfair, those affected are likely to seek to avoid or evade it.

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Yes Prim… it is the benefit reduction on top of the tax that yields the effective 90% marginal rate. This is also what I am talking about with respect to Sweden.

Working for families was revised partly behind the idea of changing the result a bit, remains to be seen how much of a change has been managed… my problem with the result is that while the hump can be less abrupt, there is a clear reduction as one gets firmly into the upper bracket… I may pay an effective 90% but someone on 120K pays an effective 39%. In Sweden they’d pay 56% and the emr on 60-80K would never be higher than that.

My point is that it can be fixed. Nobody in Labour or National has the slightest interest in fixing it.

respectfully
BJ

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BJ – perhaps the 90% figure takes benefits into account … I am not familiar with the working for families package or other benefits. Perhaps you can briefly enlighten such types as myself on this tax issue …

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BJ – how did you get the figure 90%?

My understanding is 19% on personal income up to a first threshold, then 33% on every dollar after that up to the next threshold, then 39% above that. These are marginal tax rates.

I think that the system used to be the way you describe, some years ago. People did complain about getting less net income after moving up to a new tax bracket.

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BB – you’re right – different ways of looking at things and viewing life. We all have to choose what ultimately brings us happiness eh – we all work hard at one thing or another (whether for money or something else) in order to facilitate doign the things we enjoy – whatever they are.
Anyway, best wishes,
Ecomonkey

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Eco

I just do not accept that argument (leaving aside the FEW genuine cases) there are far to many people in NZ who just cannot be bothered trying to better themselves, it is far easier for them to bludge of the likes of me.

I chose to work hard as I want to enjoy the better things in life, I also want the satisfaction of knowing that I earned those things.

I guess it is just different from the way that you look at things and that is not to say that one of us is right and one is wrong.

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bj

Personally I quite enjoy Rugby and have a real passion for Cricket but I am not prepared to pay for a stadium when we have so many other things we could spend that money on.

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Big Bruv

I didn’t say I got real answers from them. All they said to me was that taxes are “too hard to fix”. No interest in Rugby… or stadiums.

ciao
BJ

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Hi Big Bruv

“How much is enough?…”

I would think ‘Enough’ is enough to be able to feed oneself healthily, keep a roof over one’s head and have enough left over to enjoy life ie to travel, be sociable etc

“those who work hard and earn reasonable money (note i did say reasonable) already pay an exorbitant amount of money in taxes that “help outâ€?.”

Maybe it will help to bear in mind that many people work hard and yet do not earn ‘reasonable’ money – ie they struggle to cover basic needs. Life is unfair where money is concerned – it is perhaps the nature of the beast – but it could be worse, right?

“It seems to me that the more I work the more I am asked to help out those who are to bloody lazy to do it for themselves. ”

I’m sorry you feel this way – yes, the system can be unfair to those who earn little as well as those who earn more. Please note that not everyone is too lazy to earn enough to not need handouts in one way or another. Many, through no fault of their own, simple cannot earn enough – again because the system is unfair.
Rather than blame/feel badly towards those who you think are causing you to work harder, you could perhaps change your own working lifestyle? If you don’t think you are getting back what you deserve from your hard work, you could work less, earn only enough for you to get by perhaps and have more time to spend on things that bring you more significant happiness.
Despite what we are force-fed by our governments, media, social peers, corporate advertising etc, earning money is not the reason we are on the planet! I know it sounds too simple, but if you don’t like the system, then change it, starting with yourself!
Sorry of this sounds a little patronising, it’s not meant to. Trying to be helpful

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BJ

Given that you talk to this government more than I do, can you tell me just what they plan to do with the 11 Billion surplus now that the Waterfront Stadium is a dead duck (and thank god for that)
Because if they have any of my money floating around I would quite like it back.

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Big Bruv

Overall, it isn’t the more you work, it is the more you earn, and the problem is here in NZ, that there is a whacking great disconnect between the earnings and the tax..

Again, the issue is the “marginal tax” on income (including benefits), and it fails the test of fairness in that it rises from 30% or so to 90% where the income is between roughly 50 and 80K and then it drops back to 40% …

This is the most egregious bast@rdization of tax & benefit structures I have ever seen, and this government has told me it’s “too hard” to fix.

Sweden, not known for low taxes, manages to create a structure that is monotonically increasing with a higher top rate that applies to the highest earners. Here the game is PURELY “sock it to the middle class”, with a double whammy if you aren’t invested in real-estate.

respectfully
BJ

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ecomonkey

How much is enough?…those who work hard and earn reasonable money (note i did say reasonable) already pay an exorbitant amount of money in taxes that “help out”.

It seems to me that the more I work the more I am asked to help out those who are to bloody lazy to do it for themselves.

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Big Bruv said:
Why should income be taken into account when deciding the level of council tax?

I didn’t say it should. I’m not defending property rating system which, like the council tax, can produce some very unfair outcomes. But both are preferrable to a regressive poll tax that takes no account of a person’s ability to pay.

As a general rule, I think axes designed to raise revenue should be progressive, but taxes designed to modify behaviour (such as eco-taxes and the tax on booze and fags you mention) should be regressive. GST, which is the only tax on the meat and groceries you mention, is not as regressive as some claim, since poor people spend most of their income on financial services and/or rent, which are not subject to GST. And we do actually have subsidised meat and groceries for poor people – that’s what income-tested benefits and Family Assistance are all about.

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Hi there,
- just throwing a somewhat random spanner in the works:

“…we don’t have subsidised meat or groceries, we don’t have subsidised booze or fags…”

Actually we do, in the UK subsidised meat, groceries & booze can be found at Tesco sold under the Tesco Value label!! Not sure what the equivalent is over here…

More seriously tho, I know we’re being hypothetical but that elderly person sounds like they may have options about where and how they live given that she/he can afford to pay $4000 council tax. Whereas the family of six or seven, who I’m assuming are somewhat less well off, as they do not pay any council tax probably have a reduced list of options in terms of where and how they live.

It makes sense to me that the more money one earns, the more one should give back to help out those who aren’t able to earn as much for whatever reason. Is that terribly socialist!

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Toad

Why should income be taken into account when deciding the level of council tax?
If we all use the services we should all pay, we don’t have subsidised meat or groceries, we don’t have subsidised booze or fags why the hell should I subsidise others given that a ridiculous amount of the money I earn is stolen from me and poured into the social welfare black hole as it is.

How is it that an elderly person who lives alone in a home may face a rates bill of $4000 and over yet a family of six or seven living in a state house pays nothing?

Any rating system needs to be fair and equitable, the current system is neither.

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